IMP Power - Rs.95.00

Establised in 1961, IMP Powers Ltd (IPL) was originally incorporated as Industrial Meters Ltd and is the flagship company of IMP-Mangalam Group. Incidentally, meters like three vectors Meter, Maximum Demand Indicator, Low Power Factor Meter etc. were introduced and developed for the first time in the country by IPL. Currently, the company manufactures the entire range of electrical measuring instruments, testing equipments, distribution & power transformers. It is well known for making quality AUTO EHV power distribution, special purpose, furnace, thyristor duty transformers and reactors. It’s a government recognized export house and an ISO 9001:2000 certified company by DNV. Its regularly exporting transformers to UK, New Zealand, Australia, Malaysia, Nigeria, Kenya, Ghana, Dubai, Sri Lanka, Jordan, Nepal, Bangladesh etc. and gets repeated orders from them. IPL transformers have won appreciation from all customers and are widely accepted by all the state electricity boards, railways, public & private sector undertakings.

It has two manufacturing facilities, one in Mumbai and another in Silvassa which can manufacture transformers from 10 KVA to 150 MVA. Its Silvassa unit is spread across 5 acres of land and has a total installed capacity of 3600 MVA per annum. Interestingly, it is the only transformer company in India to be in sales tax free zone. Computer Aided Design (CAD) programmes are used to determine various critical parameters in electrical designs and to arrive at optimized design solution much faster. IPL has a wide network of dealers comprising its agents & representatives all over the country to assist clients and render all kinds of commercial and engineering support while selecting transformers application-wise and render after sales service. In India, the company has supplied to Birlas, Tatas, KEC International, L&T, Nagarjuna Construction, BSES, DLF, Siemens, Thapar, ITC, Ispat, SAIL, NTPC, Defence, Railways etc and most of the SEBs across the country. Even transformer giants like ABB and Crompton Greaves Ltd. had placed orders for various distribution & power transformers.Post implementation of corporate debt restructuring (CDR) package, the company has turned around smartly and is now on a high growth trajectory. The transformers and electrical measuring instruments industry is likely to grow at a fast pace than the power sector as a whole.

With the implementation of the APDRP programme, the demand is likely to further move up. Besides, IPL is planning to enter into the most lucrative single phase transformer segment. Moreover, to consolidate is manufacturing capabilities, the company is planning to sell its 22,000 sq ft Kandivali land that may fetch around Rs.4 ~ 5 cr. to the company. For year ending June 2006, it may report sales of Rs.65 cr. and Net Profit of Rs.4 cr., which means an EPS of Rs.9 on its current equity of Rs.4.60 cr. But rising copper prices is a cause of concern for the company. For FY07, it may clock a turnover of Rs.90 cr. with NP of Rs.6 cr. i.e. an EPS of Rs.13. As the company is planning to raise capital, this will dilute its equity to some extent and the EPS will be little lower around Rs.10~11. Though it may not be a multibagger from the current level, investors can buy it at lower levels with a price target of Rs.150 in 15~18 months.

Amex Information Technology - Rs.25.00

Incorporated in 1991, Amex Information Technology Ltd (Amex) is a niche player specializing in Business Process Outsourcing (BPO) services in various sectors. It’s a premier technology based firm, offering comprehensive and professional IT services also. Amex provides total solutions to customers in India and abroad, based on its expertise in vertical markets like telecom, finance, banking, insurance and manufacturing. It possesses excellence in terms of skills in systems engineering and high level project management. It has fully operational offices of its group companies in UK, Sweden and UAE. It has also formed a company by the name Media Information Technology Ltd in UK and Raydox Technology FZ LLC in UAE to cater the international market. It has a reputed clientele which includes big corporates like LIC, BSE, Govt of Maharashtra, Siemens, Novartis, HCL, RBI, Thomas Cook. IPCA, BPCL, Colgate, NIC etc. in India whereas Com Metodi, Team Systems, UKCRS, Old Bailey, Saicom, ZF, HEDS etc in the international market. Basically AMEX’s operation is segmented in 3 divisions’ viz. BPO, Biometric & IT services :

BPO: In BPO, the company focuses on 3 verticals. They are Basic-Fund Accounting, KPO, E-Accounting & E-publishing. Through these SBUs it offers exhaustive services for fund accounting, accounts write-ups, compilation of financial statements, payroll processing, tax services and returns, data management system like form processing, data conversion, data digitization, digital library etc. For this, it has also developed a product by the name ‘Optidocs’ which is well accepted in the market. It also has 500 seat BPO centre in Chennai to cater to its international clients

Biometric: Under this division, AMEX has developed software solutions based on biometric technology. It deals in finger print scanners, finger print standalone system with software for time attendance, access control, desktop / network logon etc. The company has developed desktop & network log on authentication software called ‘Tutis Authentication System’, supporting multiple fingerprint biometric sensors manufactured in the world. It is also an authorized reseller of biometric hardware products of SecuGen Corp, USA and Cross Match Technology USA. Interestingly, AMEX has developed biometric authentication on the internet, which can be adopted in many Internet based applications like online banking, insurance and credit card payments or for any website which requires a very very secured login. It also provides Fingerprint Door Locks and users Time and Attendance System for SOHO Segment.

IT Services: Its entire ITES operations are conducted by its subsidiary, Vishal Information Technologies Limited which is getting merged with it shortly. It has access to highly skilled and experienced IT professionals who can deliver solutions on well-known industries and on emerging platforms & technologies. The company also has expertise in telephony and networking technologies. It has developed applications and software solutions based on DILOGIC cards using the C, API on NT and UNIX as well as PARITY components and VOS. Components for voice recording over telephone lines for transcription services including the delivery of voice data to appropriate transcribers, customized IVR, voice-recording systems, internet fax servers, fax demand components, telebanking and other customized telephony solutions are also developed by AMEX.

For the nine months ending 31 Dec 2006, its Sales grew by 23% to Rs.32 cr. whereas its NP increased by 55% to Rs.8.55 cr. on a consolidated basis. Considering its track record, it may end up FY06 with total revenue of Rs.45 cr. and NP of Rs.11.50 cr. This works out to a consolidate EPS of Rs.5 on its consolidated equity of around Rs.21 cr. For FY07, it may report topline of Rs.55 cr. and NP of Rs.12.50 cr. i.e. an EPS of Rs.6. For FY06, the company is expected to declare 10% dividend on the back of a robust performance. Investors are advised to buy at current levels as the scrip can appreciate 50% in 12~15 months.

STOCK WATCH

Although its Q4FY06 results were quite flat, Indian Sucrose’s (Code No: 500319) (Rs.50) full year figures look very impressive while its revenue grew by 50% to Rs.102 cr., its net profit zoomed 162% to Rs.15.50 cr. registering an EPS of Rs.10 on an equity of Rs.15.50 cr. Its OPM of 24% is one of the best in the industry. And this is just standalone figures. Consolidated figures will be far better as recently it acquired a sugar unit - Cosmos Industries in Dhuri, Punjab, having a capacity of 2500 TCD. Moreover, the company has also expanded its own capacity to 5000 TCD from 3500 TCD, the full impact of which will be visible in FY07. It may report an EPS of Rs.13 for FY07 and may even return to the dividend list. The scrip is trading cheap currently only because it’s in Z category. The share price is bound to cross Rs.100 sooner than later.

Riding the infrastructure boom, Ador Fontech (Code No: 530431) (Rs.138) came out with fantastic results for the March quarter. Its topline increased by nearly 30% to Rs.22 cr. but net profit more than doubled to Rs.2 cr. due to better margins. For the full year FY06, it registered a turnover of Rs.69 cr. (up 26%) and a net profit of Rs.4.45 cr. (up 134%) with an EPS of Rs.13 on its tiny equity of Rs.3.50 cr. It even declared Rs.4 as dividend. Based on the same pace, for FY07 it can report a net profit of Rs.6.50 cr. on a topline of Rs.90 cr. i.e. an EPS of Rs.19. That means the scrip has the potential to double in 12-15 months. But the only concern is its merger with Ador Welding, in which the swap ratio may not favour the company. Otherwise, it’s a great buy even at current levels.

With the markets hitting an all time high, retail participation in rising volumes are healthy and stock broking firms are making merry. And Twentieth Century Management (Code No: 526921) (Rs.49) run by Mumbai based broker, Sundar Iyer is no exception. This debt free company ended FY06 on a very buoyant note. Its total revenue increased by 140% to Rs.19.65 cr. whereas its net profit tripled to Rs.17.75 cr. This translates into an EPS of Rs.17 on its equity of Rs.10.50 cr. It is learnt that the company is still holding shares of some reputed construction companies whose market value is much higher than its cost. Moreover, the company is planning to approach RBI for restoration of its NBFC registration. But in spite of being a profit making company, it did not declare any dividend. Hence only aggressive investors are advised to take exposure as it’s a risky bet.

After reporting disappointing results for the first half, the second half of FY06 has been quite good for Rajratan Global Wire (Code No: 517522) (Rs.127). For Q4FY06 though its sales was down 15% to Rs.26 cr., its net profit more than doubled to Rs.2.80 cr. on the back of a higher operating margins. For the full year its sales was marginally up to Rs.99 cr. but its net profit increased by 30% to Rs.6 cr. which led to an EPS of Rs.14 on its small equity of Rs.4.35 cr. Its OPM stood at healthy 13%. With the rising demand for tyres from vehicle manufacturers as well as the replacement market, the company is expected to perform well in coming years. Assuming the same profit margin, the company can register an EPS of Rs.20 for FY07. Hence investors can buy this scrip with an expectation of 25-30% return in a year.

Post the amalgamation of Pranay Sheetmetal and Valueline Hotel & Console Estate, Mahindra Ugine (Code No: 504823) (Rs.160) came out first time with the consolidated results and surpassed analysts’ expectations. For Q4FY06 its sales increased by 22% to Rs.186 cr. whereas its first time spurted 130% to Rs.35 cr. in spite of tax provision of a whopping Rs.17 cr. amazingly, it reported an OPM of 30%. If it continues to perform in the same fashion, it will register an OPM of 20-25% on a conservative basis and can report sales of Rs.775 cr. with a net profit of Rs.90 cr. for FY07 i.e. an EPS of Rs.28. Investors are strongly recommended to buy it at declines as the scrip can touch Rs.225 in the medium term.

Uniproducts India - Rs.54.00

Incorporated in 1982, Uniproducts India Ltd (UIL) is a pioneer in the manufacture of non-woven fabrics setting up the first fully integrated non-woven plant in technical collaboration with Uniproducts, Canada Inc. It was also the first to introduce wall-to-wall carpet, manufacture microdot fusible interlining and manufacture moulded carpets, NVH components and heatshields for automobiles. Presently, its product portfolio is segmented into three divisions viz: automotive, flooring and interlining. Under the Flooring Division it deals in tufted boardroom carpet and wooden laminate flooring which it markets under the brand name ‘Sheerwood’ laminates. Its Interlining division makes fusible as well as non-fusible interlining using chemical bond and thermobond technique and sells under the brand name as ‘Unitex’. But the major revenue driver for the company, which constitutes more than 80% of sales, is its Automotive Division wherein it manufactures as many as 190 different components of carpets, trims, NVH parts and heat shields for practically all major automobile manufacturers in India.

UIL has two manufacturing units, one near Rewari in Haryana and the other one at Noida near Delhi. Both its units are ISO / TS 16946 certified whereas its Rewari unit also holds ISO: 14000 certification. For manufacture of heat shield components, the company has a technical collaboration with Rieter Automotive Systems of Switzerland, which is among the world's largest and most reputed companies in this field. Last year, the company formed a joint venture with Juken Technology Ltd, Singapore, for production of mould fabrication and plastic injections components. Besides, it has already commenced production of state-of-the-art line from Dilo Systems, Germany, for the manufacture of high quality needle punch roof-lining and random velour fabrics. The company is a vendor to virtually all automakers like Fiat, Tata Motors, Maruti, Ashok Leyland, Honda, M&M, Toyota, and GM etc. apart from international auto ancillary biggies like Lear Corporation and Antolin group. Ford, UK, has also approved UIL for the supply of carpets and interlining for cars being manufactured in Great Britain.

According to estimates, the domestic automobile industry is expected to touch an annual sale of 20,00,000 cars by 2010, which will be a big opportunity for the company. Besides, India is going to become a major outsourcing hub for auto components manufacturing. Given its strength in innovation, engineering and product development. UIL is well- placed to benefit from this opportunity. Moreover, the company has aggressive expansion plans for which it is raising around Rs.18 cr. via 1:1 right issue @ Rs.40 per share. Considering all these factors, it may report sales of Rs.120 cr. and NP of Rs.3.50 cr. for FY07, which leads to an EPS of Rs.8 on its current equity of Rs.4.50 cr. With a gross block of Rs.65 cr., cash EPS of Rs.18 and book value of Rs.60, the scrip is trading fairly cheap at Rs.55 having a market cap of only Rs.25 cr. Although the forthcoming right issue will dilute its equity, but the impact of its expansion will be visible in FY08. So only long-term investors with patience are advised to take exposure in this scrip. Share price can easily double in 2 years.

Satnam Overseas - Rs.85.00

Incorporated in 1989, Satnam Overseas Ltd (SOL) was promoted by Sri Satnam Arora, Sri Jugal Kishore Arora, and Sri Gurnam Arora as a private limited company but was subsequently converted to a public ltd company in 1992. Today, SOL has emerged as a leading food company from India offering a diverse range of authentic Indian food products with offices and customers in over 57 countries. Apart from being a dominant Indian player in the global Basmati rice market, it is the undisputed leader in the domestic branded Basmati rice segment with more than 35% market share. The company’s flagship brand ‘Kohinoor’, enjoys excellent brand equity both in Indian and global markets and is known for its quality, aroma and flavour. Besides, it has other notable brands like ‘Trophy’, ‘Charminar’, ‘Rose’, ‘Darbar’, ‘Shehanshah’ and ‘Falcon’ in its portfolio.

SOL has world-class, state-of-the-art plants with one of the largest milling capacities in India at 50 metric tonnes per hour. These plants are fully automated through the entire chain of processing of rice from paddy to the packaging of the final product and are fully computer-aided with state-of-the-art cameras to detect impurities and maintain quality, colour and size. The company has a very strong distribution network with more than 170 distributors, 475 stockists and over 2,40,000 retailers across the globe. SOL has also established two wholly owned subsidiaries in the USA and UK and a Joint Venture in Dubai (U.A.E.) to augment its marketing strength in these regions. Last year, it commissioned a new rice milling facility in the UK to process unmilled basmati rice exported from India for sale in England and the continent. For future growth and better profit margin, the company is focusing more on its branded business and is aggressively expanding its presence in ready-to-eat foods (RTE) segment. SOL has an exhaustive product portfolio under its RTE segment including Veg. Pulav, desserts like moong/suzi ka halwa, wide range of heat & eat curries like dal makhani, chana masala, kashmiri rajma, aloo palak, kadhi pakoda, chhole etc, cooking pastes, cook-in sauces, chutneys, spices and a variety of combination (combi) meals. Recently, the company set up a frozen food processing facility at Bahalgarh, Sonepat (Haryana) having a capacity of 20,000 kg per day which has already started commercial production and received orders from Singapore, Mauritius, UK and South Africa. With this unit, its product basket is now diversified to include gourmet products, Indian Breads like parantha, naan, kulcha etc. and a range of snacks like samosas, spring rolls, vegetable kababs, dosa, vada, idli etc. In the near future, it has plans to enter into the business of fresh fruits and fruit based snacks and desserts.

SOL has been awarded export excellence award for fifteen consecutive years since 1991 by the Agricultural & Processed Foods Export Development Authority (APEDA). With the govt. putting special emphasis on food processing, the future prospects of the company are very promising. To funds its expansion and working capital requirements, the company has raised around Rs.90 cr. through FCCB route. For FY07, it is estimated to report sales of more than Rs.600 cr. and NP of 28 cr. This translates into EPS of Rs.14 on its current equity of Rs.19.60 cr., whereas the diluted EPS works out around Rs.10. The 52-week H/L of the scrip is Rs.113/73. Investors are strongly recommended to buy at current levels with a price target of Rs.150 in 15~18 months.